It is true that when you tally the costs connected to health care in the United States in 2010, you come up with about $2.6 trillion. It also is true that $2.6 trillion amounts to nearly 18 percent of $14.6 trillion, the U.S. gross domestic product for 2010. GDP is the total value of all economic activity in every area and aspect of American life.
And it is true that if the United States could spin off health care and make it a separate country, our GDP still would rank No. 1, but the new country of Healthcaristan would be tied with France for the fifth largest economy in the world after China, Japan and Germany.
The problem with these kinds of truths is that it is very difficult for anybody to relate to a trillion anything. An eye-opening new report on the costs of health insurance offered by private employers tackles this big-number problem head-on. It boils the figures down to family-budget proportions, breaks them out state by state and connects them directly to other family financial concerns.
The findings strongly suggest that even the limited reforms of the Patient Protection and Affordable Care Act of 2010 can help slow the growth of health care costs and save money for employees and their families, businesses and the overall American economy. That assumes that the law survives next year's legal review by the U.S. Supreme Court.
The report, released this month by the Commonwealth Fund, documents the growth of private health insurance premiums paid by businesses and employees between 2003 and 2010.
For example, in 2003, the average Missouri worker paid $2,286 per year as her share of premiums for family coverage offered through her employer. By 2010, that had risen to $3,280.
And there was another important escalation over those eight years. In 2003, the same average Missouri worker paid $922 to cover the cost of deductibles. By 2010, deductible costs had jumped to $2,146.
The pattern was the same in Illinois: In 2003, an average worker paid $2,212 in premiums and $1,102 in deductibles for his share of family coverage. By 2010, he was paying $3,928 in premiums and $1,943 in deductibles.
The increases cost businesses even more. In Missouri, for example, companies with fewer than 50 workers paid $8,241 for their share of an employee's family coverage premiums in 2003. By 2010, the cost was $12,997. Larger businesses saw those figures rise from $9,137 to $12,706 over the same eight years. That left companies with less money available to raise salaries and wages.
The impact on family finances has been direct and dismaying: In 2003, 14 percent of the average Missouri worker's median household income went to cover premium costs for health insurance through her employer. By 2010, that household was paying 19.6 percent of its income for health insurance.
The more of a family's income that's spent on health insurance costs, the less there is to pay for housing expenses, utilities, transportation, college education for children and savings for emergencies and retirement. Instead of looking toward for the future, families find themselves scrambling to cover the rising expenses of the present.
The Commonwealth Fund report points to provisions of the Affordable Care Act that require health insurers to spend at least 80 percent or 85 percent of premium revenue on actual health care. This gives them a financial incentive to reduce duplicative billing and other administrative costs.
The law also expands the review of premium increases by state and federal agencies. States also must set up insurance exchanges that should increase competition among private insurers and make it easier for individuals and businesses to do apples-to-apples comparison shopping for coverage.
The stakes of the heated debate over the Affordable Care Act are not merely ideological, but also financial. If premiums continue increasing at the rate they did from 2003 to 2010, family coverage for an average Missouri worker will cost $16,704 by 2015 and $21,877 by 2020. If reforms help cut the rate of increase of health care costs by just 1.5 percent, those figures would be $15,550 in 2015 and $18,959 in 2020.
We're confident that American families, including those in Missouri and Illinois, would have no trouble putting those savings to good use.
